Indonesian Plastic Entrepreneurs Activate Survival Mode – What Does It Mean?

Geopolitical tensions reigniting in the Middle East are beginning to create ripple effects on the global industry. For Indonesia, the impact is felt as far as the petrochemical sector, which now must confront surging costs alongside supply uncertainties for raw materials.

This situation does not stand alone. Increasing domestic needs are instead amplifying the pressure, particularly amid ongoing production capacity expansions in the petrochemical industry.

“From the petrochemical industry perspective, the 2024 figure is around 2.7 million tonnes per year. But in 2025, due to new factories, our naphtha needs will actually reach 4.5 million tonnes,” said Fajar Budiono, Secretary General of the Indonesian Association of Olefin, Aromatic, and Plastic Industries (INAPLAS), in his statement on Tuesday (21/4/2026).

This surge in requirements is forcing industry players to think quickly to maintain operational sustainability. One measure being taken is to seek new supply sources outside the Middle East region.

However, this shift in supply sources carries significant consequences. In addition to higher logistics costs, delivery times are also much longer than before.

“If naphtha shipments from the Middle East to Indonesia take only 10 to 15 days. But from elsewhere, the fastest is 50 days,” Fajar stated.

Pressures coming from all directions have placed the industry in a challenging position. Business players must manage risks more tightly to remain viable.

“So we call it survival mode now,” he added.

Amid these conditions, the industry is not standing idle. Efforts to diversify raw materials are being implemented as a strategy to reduce dependence on naphtha.

This step is considered crucial to maintaining production flexibility, especially when primary supplies are disrupted by unpredictable global dynamics.

“Now we can seek alternative naphtha substitutes, the first being condensate. The second is LPG,” Fajar said.

Nevertheless, the use of alternatives like LPG is not yet fully optimal. Regulatory barriers remain a challenge that needs to be addressed for these options to become truly competitive.

Director of the Center of Economic and Law Studies (Celios), Nailul Huda, assesses that global pressures are also expected to have wider impacts on the economy. Rising energy prices are one factor that could trigger a domino effect across various sectors.

“One impact of the failed Iran-US negotiations is global economic uncertainty, particularly related to trade. Oil prices are certain to remain high, and international trade costs will also increase,” he said.

Dependence on imported raw materials is becoming an increasingly evident weakness in situations like this. The national petrochemical industry still relies heavily on foreign supplies, especially from the Middle East region.

This condition makes efforts to secure domestic supplies even more critical. Without such measures, the impact of cost increases could directly affect downstream sectors and the public at large.

“In the short term, fulfilling domestic supplies is very important to lower plastic prices. If not, there could be a 30 percent rise in domestic service prices. From the laundry industry to other SMEs, they are highly vulnerable to plastic price increases. On one hand, there needs to be development of plastics made from domestically abundant and affordable raw materials,” Nailul stated.